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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (30404)	5/20/1999 5:33:00 AM
From: Duker	Read Replies (3) \| Respond to of 70976

i totally agree. the issues i raise are the growth rate (even if amat grow very well ther appears to be a very large speed bump on the horizon, imho) and the fat, fat valuation (not a trivial matter). I can not call the speed bump ... nor can the company ... the analysts ... so, there is that. On the valuation, I said in my response: I will never argue that AMAT is cheap in the $60's ... I will add to that, however. When you look for powerhouse companies (that presumably deserve higher multiples), AMAT is clearly one. This is worth some premium over the LRCX's of the world. In a Market where valuations border on the ridiculous for companies with little to no staying power ... AMAT is a company with a near-term ~$2.20 run rate (annualize next quarter). There is a solid chance that they get to a number in excess of $3.00 in CY2000. 20 multiples are not cheap; they are only relatively cheap ... and relative value is not value at all. That said, for those with a longer time horizon and an aversion to paying tribute to the US Treasury, AMAT is clearly cheap based on any rational projection of the potential of this industry -- and the likelihood that AMAT will capture its fair share of the profits. So, for those who bought at sub-$30 prices in the last trough (and/or in the Summer of 1996 in the low teens ... split adjusted), the pressure to sell due to the notion of some short-term overvaluation is really quite minimal. Trim back the position when you only have to pay 20 cents on every dollar to the US Government and hold a low-cost basis, core position in AMAT. This is not a trading strategy, but I am not a trader. Sloth permeates (dominates?) my investment style (and my life?) ... and, long ago, I came to the realization that I have no ability to trade quickly in and out of names, while doing so in a tax-efficient and high-return manner. --Duker